Ora Lee Williams v. Walker-Thomas Furniture Co.

District of Columbia Court of Appeals · Contracts

Contractsinstallment salescross-collateral payment allocationretention of titleduty to readunilateral mistakeno fraudpublic policy

Facts

Appellant, who had limited education and supported herself and seven children on public assistance, entered into a continuous course of installment purchases from appellee between 1957 and 1962, signing fourteen contracts. Each contract contained fine-print language stating that payments after the first purchase would be prorated among all outstanding purchases, thereby keeping a balance due on every item until the entire account was paid off. Appellant testified that she believed each item became hers once payments equaled that item's price, that many contracts were signed in blank at her home, that she did not read them, and that she was not given copies, though she admitted she did not ask anyone to read or explain them. Before the last purchase her balance had been reduced to $164, but appellee then sold her a $514 stereo set, raising the balance to $678, despite knowing from the contract information that she received only a $218 monthly government stipend.

Issue

Whether appellant could avoid the installment contracts on the grounds that there was no meeting of the minds because she misunderstood the payment-allocation provision, and whether the contracts were unenforceable as contrary to public policy because of appellee's exploitative conduct.

Rule

A person who signs a contract has a duty to read it, and one who refrains from reading or from having it read and explained, absent fraud or misrepresentation, is bound by its terms. A unilateral mistake about contract terms does not negate assent under these circumstances, and a court will not invalidate a contract as against public policy without a recognized legal basis for doing so.

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In Cleveland, Tanya Brooks bought a used refrigerator from Lakeview Home Goods under a written installment agreement. The contract stated in small print that each payment would be applied proportionally across all outstanding purchases, but Tanya signed without reading it and later said she assumed each item would be paid off separately; no salesperson explained the clause, and none said anything false about it.

If Tanya stops paying and the store seeks to repossess several items under the contract, what is Tanya's strongest likely result on her argument that there was no mutual assent?

Explanation. The majority rule is that one who signs a contract has a duty to read it and is bound by its terms unless assent was procured by fraud or misrepresentation. A mistaken understanding by only one party about how payments are allocated is treated as unilateral mistake, not lack of mutual assent. The fine print and the buyer's failure to read do not alone undo the agreement. (Derived from Ora Lee Williams v. Walker-Thomas Furniture Co. (n.d.).)